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Notes on Trump 38 – midterm results

Wikipedia on Republican factions is hopelessly out of date but it seems clear Trump now has a large party in Congress, including many GOP incumbents who will do as they are told because they will lose primaries if they don’t. That is all he needs to get bipartisan legislation through that will help Trump win in 2020.

Democrat side far more seriously divided into factions that will not be able to unite on tactics or strategy.

Here are two reasonably perceptive articles from party apparatchiks, Matthew Yglesias warning against helping Trump on infrastructure and Ezra Klein warning against opposing Trump blindly on popular issues. First Matthew:

Matthew makes the brilliant tactical suggestion that Democrats derail infrastructure programs by insisting on a “visionary” program of “clean energy generation” and “carbon-cutting transportation”. I said it was reasonably perceptive and tactically brilliant as it conceivably might appeal to enough Democrat senators not facing re-election to block the 60% majority needed for an infrastructure program that would help Trump get elected. I am not aware of any other proposed maneuver that could prevent something bipartisan from emerging. But it won’t be very helpful for 2020 as most Americans are not likely to be impressed by posturing about “clean energy” and “carbon cutting”.

Now here’s Ezra, also from “American Prospect” and so in roughly the same liberal/progressive faction:

His report of various competing views also shows some real insight and a more realistic expectation that Democrats are not going to be capableof any sort of disciplined approach and will in fact go for endless investigations of Trump (which is one thing all factions and their entire base coud agree on, against the sound advice of their apparatchiks).

But despite this insight his solution is directly opposite to Matthew’s. He wants Democrats to come up with realistic “progressive” policies and actually believes that Trump will be stuck because he is intimidated by traditional GOP opposition to those policies. Perhaps more of a journalist than an apparatchik. Didn’t notice that Trump defeated the GOP before he defeated the Democrats.

As well as the identity politicians and the impeachers, there was the expected increase in “moderates” from “purple seats” who won primaries because they were more likely to defeat incumbent GOP candidates, especially in better off suburbs. This has a double effect in tightening Trump’s grip on GOP by removing old guard incumbents while also weakening Democrats ability to resist deals that help Trump get elected again in 2020.

With the old GOP crushed there will be clear majorities for improved healthcare and infrastructure spending.

There was also the expected increase in “progressives” who will have a double effect in being noisy enough to help consolidate Republican voters while also helping push through the massive deficits Trump needs, even if other Democrat factions try to “resist”.

As shown by the midterm campaign, Democrats are not going to fight Trump on isolationism or protectionism and they won’t be effective opponents on immigration either.

Wikipedia on Democrat factions not updated yet but worth checking after final results in:

Perhaps its still too early to tell whether they can agree on a plausible strategy after getting hit by reality, but I see no sign of such agreement even within a single faction let alone among several with far less in common than those two.

11 thoughts on “Notes on Trump 38 – midterm results”

Cannot see any reason to think infrastructure spending will have any significant positive impact. Assume it will lead to increased interest rates as it has done and is doing and that will mean a slower economy and that will mean Trump loses!!!
I think the consensus is that the USA will slow down next year and all infrastructure spending could do is weaken the slowdown. I cant see the anything to back the assumption that infrastructure spending is such a powerful tool other than the preaching of Keynesians.
Think there is a lot to play out before 2020 and the least of it is whatever democrats do.

1. Certainly things can happen over two years and no predictions can be certain. But we have already had two years of Trump. It isn’t that long a period.

2. It certainly isn’t long enough for any serious likelihood that Trump will be defeated in 2020 by some candidate whose success will be independent of what Democrats do for the next two years. Two party system might crack as result of next two years, but not before 2020 elections.

3. Interest rates eventually respond to massively increased deficits. But we have had a decade or so of near zero rates since the GFC and I would not make any predictions about next two years.

4. Short term effect of major construction programs does stimulate any economy. Incresed demand increases wages, price of other construction inputs and profits. Later may have negative effect when rising input costs and supply of outputs exceeds other demand and cuts profits. But two years is short term. Most infrastructure projects will only have started. Gestation period for completion beyond 2020. Interest on financing hits way beyond 2020.

The pro-Democrat ‘Globalist’ magazine points to the extent of the infrastructure disaster in the USA.
“Roads and bridges are crumbling, with over 54,000 bridges rated structurally deficient. More than two out of five interstate roads and highways are over capacity and can no longer accommodate the massive congestion, which is consuming more fuel and costing the economy $120 billion annually. Thousands of small and medium sized towns are disintegrating and are in need of major revitalization. Moreover, the country’s railway network is in sorry condition, vastly underfunded and cobbled together with freight and commuter rail lines, putting us to shame compared to countries like China, Japan,and most European states”. https://www.theglobalist.com/us-trump-republicans-democrats-midterm-elections/?fbclid=IwAR2bwt8ZkxAIxCx8naNm8Ni35zdfccTliL_ewWXKInvNYrQ2B0Nuit1NFKY

It’s hard to see how the Democrats could oppose it. And hard to see how (all things being equal) its implementation would not create jobs and revitalisation of towns and some cities. And, on that basis, it would strengthen Trump’s re-election chances.

2. doubt it has anything to do with the democrats and all to do with the economy.

3 we had near zero interest rate and we no longer have them and they are rising. fed will increase in a couple of weaks and expects to increase 4 times next year. This will only happen if the economy stays healthy which most are betting it wont, but you can see where I am going with this

I see no evidence that proves infrastructure spending has much impact. It seems obvious that building and spending money would increase jobs etc but of course that depends where you get the money. If people didnt invest in your program then they would invest somewhere else and this may or may not be more productive, it is a distortion and it may in some cases be beneficial however I dont have any evidence of this.

I would think the benefits you are talking about are pretty quick, the long term benefits of using the infrastructure is a different question. The negatives of dragging that money out of the economy is also fairly quick

5 then we are talking about how long is the short term and asssume you think it is 4 years

I was of the opinion that kenyesians thought the government multiplier was lower than the private multiplier but in times of depression with the lack of investment then you have to go with the government spend. This is not the case in the USA. they are not in a depression tkaing from the private to finance government spending woud seem to run counter to their own theory

1. Barry’s link to Trumpist infrastructure plan is interesting. I don’t understand it and would guess that the private funding is largely imaginary for internal GOP/conservative/tea party reasons and that actual outcome will rely on sufficient Democrats voting “real” funds and thus also delivering massive deficit.

2. I don’t understand Keynesian theories, let alone whether and if any, what, theories are actually relevant to current US fiscal and monetary policy.

3. I also don’t have a theory on the basis of which anybody equipped with far more knowledge of current details than I have could make plausible forecasts for two years.

4. But it is pointless speculating about the irrelevance of the existing two party Presidential election system based on whatever anyone believes will happen economically over the next two years. Things that affect each other have to be analysed separately before they can be analysed together.

5. Illusions about “dragging that money out of the economy” are an example of that. Credit is distinct from money precisely because of the time lag between “buying” a credit (debt) instrument and repayment or “selling” it at some future yield. The yield curve moves in mysterious ways but it is ridiculous to imagine that borrowing money has ONLY a negative effect when the debt becomes due and NO short term benefit. Two years is definately short term. We are talking bond rates not overnight repos.

4 not talking about the 2 party system and am not making predictions you were doing that and am just saying Trump getting elected is not reliant on the Democrats. If one doesnt know the economic situation then one cannot pretend it doesnt exist.

5 Didnt say the money was dragged out of the economy but rather moved to a less efficient use of it. Didnt say it ONLY had a negative effect said the effects of something that is advocated for a depression are different when applied in a boom and probably wouldnt be citing infrastructure spending for Trump getting re elected if not sure of how that works in the current economic situation.

I DID say it was a distortion and may or may not be beneficial and may have an impact but think it would be insignificant and COULD be negative!!!!!!!
It is NOT a slam dunk reason for Trump to be re elected

I am pretty sure the same term “crowding out” is still used. It used to be highlighted by GOP especially when in opposition and muttered about by conservative Democrats restraining liberal Democrats even when in office. Trump’s hostile takeover of GOP results in massive amplification of the previous Reagonomics tendency for Republican administrations to actually run larger deficits than Democrats while blocking Democrat administrations from doing so with support from Democrats also worried about “crowding out”. The expected result now is not inefficiency or crowding out but fiscal and monetary collapse. The question for 2020 is one of timing.

1. Nothing about elections can be “slam dunk” two years ahead. I wrote a post confirming that results of midterms will produce Democrat behaviour conducive to Trump getting elected in 2020, you are commenting on that. As you know I am also discussing economic theory with you but have not attempted to do so in writing or to attempt analysis of current “conjuncture”. Your comments are in response to that post on effect of midterm elections on 2020 elections. Insisting that outcome depends only on economy and not on Democrat politicking is just saying don’t bother.

2. I put “dragging that money out of the economy” in quotation marks because those are the precise words you said. As for efficiency, Barry’s comment indicates it could be a quite efficient use of the funds. Either way will only affect the long term, not the 2020 elections. The concept that led you to say it was not a view on efficiency of use of funds but a view that there is some pool of “money” which government and private projects compete for. Credit issues are more complex than that because of the time lags.

3. Business channels and Democrats will both divide over whether it may or may not have an impact and may or may not be insignificant and could be negative. That discussion will not affect the long term results much but will help Trump posing as the worker’s decisive strongman leading up to 2020.

“The negatives of dragging that money out of the economy is also fairly quick” I had already explained the crowding out effect so it doesnt mean the money is gone!

Not commenting on Trump getting elected and never intended to. Commenting on infrastructure spending. Of course the USA needs infrastructure spending but that is irrelevant as we are talking about infrastructure spending as a tool to stimulate the economy. This is a contentious topic and not as simple as it sounds or some may think.

We dont have time to discuss it meaningfully now however down the track we could revisit it. It seems we should also look at credit and it’s relationship to money(credit doesnt fall from the sky)